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Brown’s Endowment Investments Drop 23% in Year, President Says

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By Janet Frankston Lorin

Sept. 9 (Bloomberg) -- Investments from Brown University’s endowment fell 23 percent in the fiscal year that ended June 30, President Ruth Simmons announced today. The total value of the endowment fell 27 percent to $2.04 billion, Simmons said. The school, in Providence, Rhode Island, paid out $132 million from the endowment for operations and received $44 million in new endowment gifts.

The school previously announced it cut $35 million from the fiscal 2010 budget and needs to cut an additional $30 million from fiscal 2011’s budget. Brown already eliminated 67 administrative and staff jobs in the 2010 fiscal year that began July 1 and 36 workers were fired, according to the school.

“The fiscal year 2009 results tell only part of the story,” Elizabeth Huidekoper, executive vice president for finance and administration, said in a statement. Brown’s endowment fell about 18 percent “over the two full years of the bear market,” about half as much as global equity markets and the Standard & Poors’s 500, she said.

Brown’s endowment is the smallest in the Ivy League, a group of eight schools in the northeast U.S. Harvard University, in Cambridge, Massachusetts, estimated investments in its fund fell 30 percent in fiscal 2009. Yale University, in New Haven, Connecticut, estimated its endowment loss to be 25 percent. The University of Pennsylvania in Philadelphia announced last month investments in its endowment fell 15.7 percent.

Cash Reserves

The university, including its medical school, relies on endowment revenue for 21 percent of its operating budget for fiscal 2010, according to the school. Its budget is $758.7 million.

and as anticipated the asset allocation followed the "Yale Model"On June 30, Brown’s endowment funds were invested 15 percent in public equity; 32 percent in hedged strategies; 17 percent in private equity; 12 percent in real assets; 9 percent in credit, 10 percent in treasuries and 5 percent in cash, according to the school’s statement.